Construction contractors typically begin the accounting process by establishing an accounting method, at which time they can begin breaking down the different types of costs incurred by their businesses. Construction business costs typically fall into one of two categories: job costs and general and administrative (G&A) costs. G&A expenses refer to general, indirect costs related to running the business, while job costs can usually be traced to a particular construction job.

Direct job costs include expenses such as subcontractor payment, labor, and materials, all of which correlate with a specific project. Common examples of direct job costs include concrete for the foundation of a building or wages paid to a construction site manager. By contrast, indirect job costs include all expenses not covered by a direct cost. For small contractors, indirect job costs often include taxes relating to labor or materials, rent of equipment, repair of facilities, and production period interest.